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International Economic Review· 2026Q1

The Causal Effect of Parents' Education on Children's Earnings

Sang Yoon Lee, Nicolas Roys, Ananth Seshadri

Short summary

An exogenous one-year increase in parents' schooling raises children's lifetime earnings by 2% on average.

AI-generated from the title and abstract; the full text is not read.

Key points

  • A model estimates the causal effect of parents' education on children's earnings.
  • Identification uses earnings differences in children with equal schooling but different parental schooling.
  • Observed intergenerational schooling correlation is mainly due to shared unobserved preferences.
  • An exogenous one-year increase in parents' schooling boosts children's lifetime earnings by 2%.

AI-generated from the title and abstract; the full text is not read.

Abstract

ABSTRACT We develop and estimate a model of endogenous schooling and earnings to isolate the causal effect of parents' education on children's outcomes. Identification uses earnings differences among children with equal schooling whose parents have different schooling. Health and Retirement Study data indicate that the observed intergenerational schooling correlation is largely driven by correlated unobserved preferences for schooling. This is partly offset by a slightly negative structural relationship between parents' and children's schooling choices. Nevertheless, an exogenous one‐year increase in parents' schooling raises children's lifetime earnings by 2 % on average.

The authors' abstract, as published at the source. International Economic Review, 2026 · DOI ↗

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Field: Sociology and Political Science

Sociology and Political ScienceSocial Sciences